Audited Financial Statement 2000

Audited Financial Statement for the Year of 2001

Balance sheet at 31 December 2001
(in Patacas)

			2001		2000			2001	2000
Account Codes		Cost	Accumulated depreciation and provisions	Net book value		Account Codes
	Assets						Shareholders’ equity


	Fixed assets					51	Capital	400,000,000	400,000,000
41	Investment	1,500,000	-	1,500,000	1,500,000
							Reserves and retained earnings
42	Tangible assets	710,811,862	233,220,356	477,591,506	495,857,914	56	Legal reserve	20,678,751	13,075,548
43	Intangible assets	955,440	929,117	26,323	165,531	59	Accumulated losses	82,113,767	(27,457,720)
		711,767,302	234,149,473	477,617,829	496,023,445	839	Prior year adjustment	-	13,095,617
						88	Profit for the year	76,032,032	105,599,622
	Current assets					89	Transfer to legal reserve	(7,603,203)	(9,123,752)
32	Stock	48,229,634	-	48,229,634	50,413,856		Total shareholders'equity	*571,221,347*	*495,189,315*



	Accounts receivable - non-current						Liabilities

26	Deposits	75,705,452	-	75,705,452	61,546,006
27	Deferred expenditure	559,599	-	559,599	961,753		Provision for risks and charges
		76,265,051	-	76,265,051	62,507,759	29	Provision for taxation	12,584,108	3,189,556

	Accounts receivable – current						Long term liabilities
21	Trade receivables	106,601,312	4,523,306	102,078,006	116,523,710	23	Bank loans	234,710,928	262,077,411
22	Advances to suppliers	7,544,049	-	7,544,049	11,292,841	27	Accrued expenses	57,432,764	54,774,683
25	Amount due from related	121,614	-	121,614	175,881			292,143,692	316,852,094
	companies
26	Other receivables	6,013,699	-	6,013,699	4,572,890		Current liabilities
27	Prepaid expenses	51,658,896	-	51,658,896	24,660,364	21	Receipts in advance	117,395,302	121,152,379
		171,939,570	4,523,306	167,416,264	157,225,686	22	Trade payable	95,398,755	105,697,531
						23	Bank loans	27,402,095	25,467,015
	Cash at bank and in hand					24	State public sector	4,004,390	3,885,362
13	Term deposits	362,598,871	-	362,598,871	383,536,231	25	Amount due to related companies	26,672,698	18,993,369
12	Demand deposits	91,854,667	-	91,854,667	49,245,526	26	Other creditors	55,130,760	72,328,481
11	Cash in hand	10,786,364	-	10,786,364	699,039	27	Accrued expenses	34,315,533	38,396,440
		465,239,902	-	465,239,902	433,480,796			360,319,533	385,920,577
							Total liabilities	*665,047,333*	*705,962,227*
	Total depreciation		234,149,473
	Total provisions		4,523,306
	Total assets	1,474,941,459	238,672,779	1,236,268,680	1,201,151,542		Total equity and liabilities	1,236,268,680	1,201,151,542

Profit and loss account for the year ended 31 December 2001
(in Patacas)

Account Codes				Account Codes
		2001	2000			2001	2000
	Expenses				Income
63	Third party supplies and services	1,302,868,521	1,127,632,876	72	Services rendered	1,595,106,723	1,437,885,166
64	Taxes	3,718	5,882	75	Supplementary receipts	66,701,973	53,055,343
65	Personnel expenses			77	Financial income	41,142,695	40,953,603
	- Remuneration	177,614,184	155,199,406			1,702,951,391	1,531,894,112
	- Other personnel expenses	49,914,389	44,563,867
66	Financial expenses
	- Interest	20,405,295	22,296,001
	- Other financial expenses	887,980	841,252
67	Other expenses and charges	9,250,951	7,272,416
68	Depreciation and amortisation	57,732,207	65,576,241
69	Provisions		3,844,001
		1,618,677,245	1,427,231,942


82	Extraordinary expenses	6,096,437	958,482	82	Extraordinary income	8,035,402	5,098,590
83	Profit tax	10,181,079	3,202,656
		1,634,954,761	1,431,393,080


	Profit for the year	76,032,032	105,599,622



		*1,710,986,793*	*1,536,992,702*			*1,710,986,793*	*1,536,992,702*

Chief Executive Officer	Director of Finance

Zhang Hongying	Wen Xiaoli

CORPORATE DATA

Board of Directors

President	Gu Tiefei
Vice President	Sun Bo
Director	Zhang Hongying
Director	Zhou Feng
Director	Kang Zhouyuan
Director	Yang Yan
Director	Brasao Antunes
Director	Pansy Ho
Director	Leung Henry Yee Hang
Director	Ng Fok

Executive Committee

President	Sun Bo
Executive Director	Zhang Hongying
Executive Director	Zhou Feng
Executive Director	Brasao Antunes
Executive Director	Pansy Ho
Executive Director	Leung Henry Yee Hang

Supervisory Committee

President	Zhang Xianlin
Member	Jacryn M. S. Ho
Member	Chan Kuok Leong

REPORT BY THE BOARD OF DIRECTORS YEAR OF 2001

1. INTRODUCTION

In accordance with the provisions of the law and the company ordinance, we hereby submit, for debate and vote, the Annual Report and Accounts for the year ended 31 December 2001. During the period from 01 January to 31 December 2001, the activities were conducted throughout the organization of the Company and on the definition of the internal performance rules.

The directors have pleasure in presenting their Annual Report together with the Supervisory Council and audited accounts of the Company for the year ended 31 December 2001.

2. PRINCIPAL ACTIVITIES

The company was incorporated on 13th September 1994 in the form of a private limited liability company and its principal activity is to operate as Macau's international airline, under the concession agreement signed on 8th March 1995 with the Macau's Territory. The company commenced operations on 9th November 1995..

3. ACCOUNTS

In the opinion of the Directors, the operating results of the Company during the financial year have not been affected by any item, transaction or event of material and of unusual nature.

- PROPOSAL FOR NET PROFIT APPLICATION

By article twenty-eight of the Articles of Association, the Board of Directors hereby submits for discussion and approval in the General Meeting the following proposals on the application of the MOP76,032,031.68 net profit.

Legal Reserve Fund

10% (Profit for the year) by the terms of

Article 432 of Commercial Code ……………………... MOP $7,603,203.17

Net Profit

To carry forward to 2002…………………………….. MOP $68,428,828.51

- FINAL NOTE

We would like to thank Air Macau staff for their dedication to effectively and efficiently discharge their duties in a professional manner.

The Board of Directors would like to express their sincere appreciation to the Shareholders, Supervisory Committee and Government Representative for their cooperation and their confidence they bestowed upon them.

Macau on the 28 of March, 2002

Gu Tiefei

Chairman , Board of Directors

REPORT OF THE SUPERVISORY COMMITTEE OF AIR MACAU

ON THE 2001 ANNUAL REPORT AND

FINANCIAL STATEMENTS PRESENTED BY THE BOARD OF DIRECTORS

This report is based on the 2001 Annual Report and Financial Statements, presented by the Board of Director of Air Macau. In preparing this report the Supervisory Committee also takes into consideration the information received during the year from the Company independent auditors as well as their final comments on the aforementioned documents..

During the course of the year the Supervisory Committee held its regular meetings, as foreseen under Air Macau's Articles of Association, and kept adequate contact with the Company's directors and officials as deemed necessary, whose co-operation with this Committee we wish to acknowledge..

During the year under study, the performance of the Supervisory Committee was supported by the help of the external auditors. Under the terms of the existing arrangements, quarterly reports were prepared and submitted to this committee. A number of accounting, control and procedural issues were identified and duly brought to the attention of Air Macau's management. The Supervisory Committee hence would like to acknowledge the important efforts contributed by the Company's management to introduce financing and control procedures in order to correct, in part, deficiencies found. While some outstanding issues awaiting to be resolved, we believe they do not materially affect the financial position of the Company as mentioned in the Financial Statements prepared by the Board of Directors. In fact it was enhancing notably. However, the Supervisory Committee emphasized that the improvement efforts of the Company needs to be persisted on so as to achieve professional and qualified standard in the areas of accounting and internal audit control.

The year 2001 was in fact, full of challenges for most of the international carriers. Due to the global economic downturn, in addition to the September 11 terrorist attack, passenger demand fell dramatically and insurance premium became more expensive. Furthermore, being encountered with harsh competition, many airlines reported operational deficit and even layoffs of employees. Hence the Supervisory Committee is happy with the outstanding financial results of the company.

Nevertheless, the Supervisory Committee recommends that sales and marketing management strategy should be enhanced in regards to the company's operational activities, so as to maintain and improve Air Macau's chances of sustained success in the future.

The Supervisory Committee based on the document received, express the opinion that the Annual Report, the Balance Sheet and the Profit and Loss Account fairly reflect the financial status of the company, and hence, recommends their approval by the shareholders.

Finally, the Supervisory Committee wishes to express its appreciation for the co-operation and prompt assistance provided by the Executive Committee Directors and other company officials.

Macau, 28^th March, 2002

Zhang Xianlin

Chairman

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